Rethink Regulation and Business Models – a Blueprint to Release Universities from the Shackles

Universities often seem to have a tendency to be there for themselves. Interaction with business and society is too often seen as unnecessary, unproductive or even as a risk or threat. However, there is so much knowledge, ideas, models and also needs out there in the non-university sector which may create mutual benefit by being strongly connected. When – which was true in my case – being thrown into the challenge of building up a new university institution from scratch without having the knowledge to do that and with very limited resources, one has to rely on interaction and soon learns about its value. This experience may be helpful also for others.

At our school, from the very beginning, we’ve been strongly integrating experts from various business and societal fields in our ownership structure, supervisory board, management team, curriculum development, full- and part-time faculty, admission interviews and many more activities. A compulsory internship of a minimum of 3-5 months in a relevant business sector during the last study semester creates synergies, brings together academic and practical knowledge and guarantees best career prospects as well as opportunities for thesis work. Part-time study programs, high-level activities in the executive education sector including seminars, short courses and customized corporate programs, collaborative research and consulting projects, career fairs, business-plan competitions, joint investments in start-ups and many more activities show that both worlds may benefit incredibly from working together. If this can also meet the highest academic standards including fierce compliance regulations, then why not share, learn and benefit from each other more strongly?

Care about the outcome, leave freedom for input

When purchasing a car, one typically has a picture of the features it should have, be it explicitly or implicitly, e.g. comfort, safety, speed, power. In other words, the focus lies on the outcome of the production process. While the customer is quite critical whether and how the promised criteria and functions – the outcome – have been thoroughly fulfilled by the supplier, he/she typically pays little attention to the details of the company structure and its production process such as whether parts of the product were bought from others; whether the product was built at day or nighttime. They, however, assert that the producer guarantees and ensures the promised quality features of that product.

While accepting that certain product standards and other forms of regulation may be necessary in order to assure market transparency, it is questionable how far such regulatory frameworks should actually affect the structure, governance and processes of an institution.

While this principle approach is true for practically any product or service available in the market, the approach towards universities is totally different. More or less every little item of the production process is regulated and controlled such as the number, composition and qualifications set for full- and part-time faculty, the size, composition, structure and competencies and interaction of boards, senates and other governance structures, the minimum and maximum number of credits allocated to certain topics etc. Many of these regulations are not only costly and time-consuming, they above all kill innovation, creativity, inspiration and engagement. Would Tesla, Apple, Uber or other companies have been brought into life, if they had been in a regulatory framework a typical university would find itself in? Shouldn’t we leave the decisions on the structure, governance and other input factors to the suppliers and see which models bring the best results?

Engage in pre-university activities

The future of the European Economy and Society, its competitiveness and resilience depend less on the performance of its university system but rather on its schools. One probably would not expect such a statement from the Rector of a university. I am, nevertheless, convinced of its truth. If a school-system doesn’t encourage and support attitudes like curiosity, creativity, courage, the value and joy of innovation, exploration, encounter, creation, trial and error, there is only little fundament for universities to build upon.

There is, however, little understanding for the continuous complaints of universities on the quality and attitude of the outcome of some school systems. Why don’t they take action and engage more in the pre-university education? Why do they not think of mergers, acquisitions, joint projects, contractual agreements and other activities of engagement in order to improve, support and incentivize the work, productivity and outcome of schools? I am convinced that universities will have to engage more actively, strongly and systematically in schools in the future; they will have to extend their value creation chain and leverage their own outcome. They may do this on their own, together with other universities or also with non-academic institutions like companies which identify that such an approach may also be highly relevant for their own future.

Publishing houses and media companies entering academia

Publishing houses are searching for, identifying collecting, revising, editing, visualizing, publishing, marketing and communicating knowledge. The same or similar functions are true for universities with no or little amendments. With information and interactions becoming more and more digital and available at one’s finger-tips, the function, role and business model of publishing houses will more and more merge with academia. Publishing houses with academic textbooks in their portfolio have the knowledge collected, revised, visualized etc. They have access to professors, researchers, reviewers, to the production of teaching material, quality control, logistics and the student market as well as to communication technology. Why then leave an attractive business opportunity to others – the academic sector – and not extend the value chain by entering the academic business and engaging directly in teaching, examining and mentoring students along with other functions of a university?

In fact, not only publishing houses, but also other businesses dealing with relevant competencies (e.g. media companies) can already be seen as new actors in the academic field. Who is working together with whom will be changing in the future, and new business models will emerge. How can one get access to knowledge (e.g. search engines), reach young people as future employees (e.g. social networks), identify start-up technologies and investors etc.? These are questions which may help to identify where new players, alliances, takeovers, compositions of players etc. may arise, enter the market and be potentially highly disruptive. The education system has been operating in specific ways; however, university structures are open and also vulnerable to new approaches of education, research and the transfer of academic knowledge which will support innovation and strengthen the competitiveness of enterprises and the economy.

Prof. Dr. Andreas Altmann studied Business Administration and Economics at the Universities of Linz and Innsbruck and International Relations at the Johns Hopkins University in Bologna. Having received his doctoral degree in Public Finance from the University of Innsbruck in 1993, Andreas Altmann embarked on his academic career as a postdoctoral researcher first at the Department of Public Finance and later on at the Department of Strategic Management. There he got involved in designing, creating and building up a new school from scratch, now known as MCI Management Center Innsbruck – The Entrepreneurial School®, under the umbrella of the University of Innsbruck, the Federal State of Tyrol, the City of Innsbruck, the Chamber of Commerce, the Chamber of Labor and the Association of Industrialists. Andreas Altmann was appointed as its start-up director in 1995 and has since then with expanded MCI into an internationally acknowledged autonomous university with currently 3300 students, 1000 faculty and staff, 250 partner universities, thousands of successful alumni around the globe, several spin-offs and numerous academic awards and distinctions. Andreas Altmann’s expertise is valued in a variety of boards, councils and regulatory bodies and has formed the ground for the conferral of the Knight’s Cross by the President of the Republic of Austria as well as other distinguished acknowledgements.